Bride Amrita Mannil, centre, enters the wedding hall with her mother Sheela Ramesh, first left, and her father Ramesh Babu during during her wedding ceremony in Kochi, Kerala. Photographer: Mahesh Shantaram
As the sound of traditional drums, trumpets and cymbals ushers Amrita Mannil into the wedding hall, she's adorned by four finely crafted necklaces, rings, 16 bangles, a glistening belt, dangling chandelier earrings and a stone-encrusted head piece to match the silk borders of her dress. She's wearing about 800 grams (1.8 pounds) of gold.
Amid the music and the chanted prayers, a gold chain is placed around her neck as the 25-year-old advertising executive marries Vimal Mohan in a traditional Hindu ceremony attended by 500 friends and relatives in Kozhikode, about 180 kilometers (112 miles) from the city of Kochi in Kerala.
"Gold is an asset the girl carries," 28-year-old Namitha Shyam, the bride's older sister, said after last month's ceremony. "The values, status and wealth of the family is represented by the gold the girl wears as she gets married. The more gold you wear, the more pride you have in your family."
The jewelry worn by the bride is typical and represents the cultural and social affinity Indians have had toward gold for centuries, making the country the world's largest consumer last year. Demand in India and China helped bullion to climb by more than $1,000 an ounce since 2000 and helped to curb this year's 23 percent rout.
At the same time, the resilience of Indian demand, and the fact the nation imports almost all the bullion it uses, poses a challenge for Prime Minister Manmohan Singh, as he seeks to trim a record current-account deficit and stem the rupee's 15 percent slide this year.
Finance Minister Palaniappan Chidambaram responded by raising import taxes three times this year to curb consumption which represented about 20 percent of world demand in 2012.
Prices more than doubled in India since 2008 and reached a record in August. The increase gave pause to Ramesh Babu, the 61-year-old father of the bride, who bought Amrita less goldthan he did for her sister's wedding five years ago. He bought 100 sovereigns, each weighing 8 grams. "We are moderate," said Babu. "There are people who give 300 to 400 sovereigns."
Indians purchase gold at festivals and for marriages as part of the bridal trousseau and as gifts in the form of jewelry. Demand will be 900 to 1,000 metric tons this year, from 864.2 tons in 2012, the World Gold Council says.
Demand in India has helped curb this year's slump in gold prices after some investors lost faith in the metal, a traditional store of value, as global inflation remained low. Bullion plunged 23 percent this year to $1,287.46 an ounce, poised for its first annual retreat since 2000. Prices in rupees have declined only 1.7 percent.
The slump in London prices erased about $64 billion from global exchange-traded products, data compiled by Bloomberg show. Central banks added to gold reserves the last two years even as they lost about $576 billion in value since bullion peaked at $1,921 an ounce in September 2011.
The $350 million PFR Gold Fund of billionaire John Paulson declined 62 percent this year through September. Investors cut their net long-position, or bets on price gains, on the Comex in New York by 37 percent in the week ended Nov. 12, the most since February, Commodity Futures Trading Commission data show.
For Indians, gold is not so much an investment as a cultural experience, said Pallavi Rao, assistant professor at the School of Communication, Manipal University, in south India.
"When you think about the great Indian wedding, you cannot think about it without all that gold jewelry," said Rao, based in Manipal, about 400 kilometers from Bangalore. "Gold buying itself becomes part of the wedding ritual."
Mannil's family spent more than six hours selecting the chains and necklaces Amrita wore at the wedding. An Indian bride without gold "is like rice without salt: bland," said Sheela Ramesh, her mother, while fiddling with her own Thali, or gold wedding locket.
"I got married in 1984, and the same tradition is being followed even now," said Ramesh. "My parents gave me gold, and we give our daughters," she said, as three other mothers, gathered at a pre-wedding ceremony to decorate Amrita's hands with henna, nodded in agreement. "In our custom we wear only gold, no artificial jewelry."
The insatiable appetite is good news for retailers such as Gitanjali Gems Ltd., Malabar Gold and Diamonds, Titan Industries Ltd., Tribhovandas Bhimji Zaveri Ltd. and Kalyan Jewellers Ltd. The stores represent 10 percent of the market estimated at about 1 trillion rupees ($15.9 billion), Edelweiss Securities Ltd. said in a report last month.
"In the long term, the fundamentals of gold demand are still intact," said Haresh Soni, chairman of the All India Gems & Jewellery Trade Federation, which represents 300,000 jewelers and bullion dealers. "For Indians, gold buying is not just a cultural or traditional compulsion but also acts as social security. From birth to death, gold is involved in all aspects of our life and used in our prayers and rituals."
To lure customers, jewelers are spending more on television and outdoor commercials and signing up Bollywood stars from Amitabh Bachchan to Shah Rukh Khan and Aishwarya Rai Bachchan. Award-winning South Indian actor Mohanlal is a brand ambassador along with actress Kareena Kapoor for Malabar Gold, which has 102 stores in the Middle East, India and Singapore.
The Babus purchased all their wedding gold from Malabar's flagship store in Kozhikode, a city famous for being the first trade link between India and Europe after Portuguese explorer Vasco Da Gama landed on its shores.
"It helped that Mohanlal is my mom's and fiance's favorite actor," said Amrita, drawing laughs from those gathered at the henna ceremony.
There are about 5 million weddings in India every year, said Prithviraj Kothari, managing director of Riddhisiddhi Bullions Ltd. and a director with the Bombay Bullion Association. The average purchase is 200 grams, he said.
The government is seeking to cut imports to 800 tons in the 12 months through March 31, from 845 tons a year earlier, to reduce the current-account deficit. The gap results mainly from bullion and crude oil imports, according to the Reserve Bank of India. The curbs caused a domestic gold shortage and buyers are paying a premium for supplies, according to the All India Gems & Jewellery Trade Federation.
"The more negative statements the government makes about gold, the more people are attracted toward it as they think that the government might ban imports," said Bachhraj Bamalwa, a director with the trade group. Farmers also invest in gold because it helps when crops are poor and some rural people use it to store wealth rather than bank accounts, said Bamalwa.
Prospects for a better-than-average harvest are fueling demand. Rural India accounts for 60 percent of consumption and the best monsoon rain in six years has boosted rice, corn and cotton crops, increasing farmers' incomes.
"A major chunk of our income goes in development of the next season's crop and some of it is invested in gold, especially if there's any marriage in the family," said Sandeep Chakane, a sugarcane farmer from Bhigwan, a town about 100 kilometers from the city of Pune.
Futures traded in Mumbai surged more than fivefold since they began about a decade ago, reaching a record 35,074 rupees per 10 grams in August.
"Price is not an issue at all," said Jyostnarani Sahoo, a 41-year-old mother from Angul in the eastern state of Odisha, who drove 25 kilometers with her husband to buy a necklace and earrings for her daughter. "In our tradition, it's a prerequisite thing in weddings. Gold prices will only rise, so we didn't want to delay it further."
Higher tariffs and central-bank rules linking foreign purchases to re-exports may cut official gold imports in the second half of the year to less than 150 tons, from 478 tons a year earlier, said the federation's Bamalwa.
That's spurred smuggling from the Middle East, Singapore and Sri Lanka. Indian laborers working in the Middle East are acting as couriers for gangs in return for a ticket home and a few thousand rupees, said Rishi Yadav, assistant commissioner at the Mumbai customs department's Air Intelligence Unit.
"When you have social compulsions, there are many ways of overcoming restrictions," said Babu as he sat in his house a day before the wedding. "Irrespective of what the government does, Indians will find a way to get around this because every wedding has to have gold."